INR vs USD, April 10: Indian rupee trades 92.9 against US dollar due to volatility ahead of RBI’s deadline for banks

As of 10:42 am (IST), the Indian rupee was trading 0.49% higher at ₹92.91 against the US dollar on Friday, compared to 92.45 at the previous currency market close, according to data collected from Investing.com data.

According to a PTI report, the forex traders in the market expect that the Indian currency is likely to witness high volatility ahead of RBI’s deadline to the banks, which now mandates to cap the overnight positions to $100 million from today.

On April 1, the RBI mandated that the banks will have to cap their net open rupee positions in the foreign exchange (forex) market at the $100 million level by the end of each business day. This move prompted banks to sell US dollars in the forex market, adding to the volatility in the domestic currency.

“An estimated 80–85 per cent of these positions have already been unwound, which means the bulk of this supportive flow is now behind us. In simple terms, the cushion that held the rupee steady is beginning to thin, and this is where the story starts to shift,” said CR Forex Advisors’ Managing Director Amit Pabari told the news agency.

The data collected from the Bloomberg US dollar spot index showed that the greenback was trading 0.08% higher at 98.90 as of 1:21 am (EDT) on April 10, compared to 98.819 at the previous market close.

The dollar rates were trading higher as the US-Iran ceasefire remains fragile amid the reduced demand for safe-haven assets in the market.

Experts said that looking ahead, the position of the domestic currency is likely to change with NOP-related support fading amid the elevated risk for global uncertainties in the market.

“With most of the NOP-related support now fading and global uncertainties still elevated, the scope for further strength seems limited,” Amit Pabari told PTI.

Pabari also highlighted that India continues to have strong buffers in the form of foreign exchange (forex) reserves and a stable banking system, but pressure points are slowly beginning to build amid foreign investors' outflow from the Indian market.